The e-invoice limit is a new regulatory requirement in India that affects how invoices are generated, processed, and stored. The Goods and Services Tax Council (GSTC), the country’s tax authority, approved B2B electronic invoicing via the Goods and Services Tax (GST) System in stages in December 2019.
The implementation of e-invoicing is a great leap towards economic change in India’s history. This project is a lofty goal. The objective is to make India a common market by harmonising the taxation system.
India has transitioned from a complex tax regime with multiple tax types— local, state, and central— to a standardized system based on digital modernization under the new GST fiscal model.
What Is GSTC?
The government established the Goods and Service Tax Council (GSTC), which closely coordinates legislative decisions with the GSTN (Goods and Services Tax Network). It is the infrastructure and information technology services provider for the central government and the 36 Indian states. The tax network is in charge of developing e-invoicing and electronic waybill platforms.
The Central Board of Indirect Taxes & Customs (CBIC) clarified that the e-invoice limit will not be reduced to Rs. 5 crore from Rs. 10 crores starting January 1, 2023. As previously announced, e-invoicing has been made mandatory for registered persons or businesses with an aggregate turnover exceeding the amount of Rs 10 crore from the previous financial year from 2017-2018 onwards.
No proposal has been submitted, nor has the GST Council made a recommendation for reducing the Rs 5 crore limit that would supposedly take effect from January 1, 2023. Below is the table reflecting the annual turnover and the new date of mandatory implementation of electronic invoices:
|Annual Turnover||New Date of Mandatory Implementation of E-Invoice|
|Exceeding 500 crore||October 1, 2020|
|Exceeding 100 crore||January 1, 2021|
|Exceeding 50 crore||April 1, 2021|
|Exceeding 20 crore||April 2, 2022|
|Exceeding 10 crore||October 1, 2022|
NIC’s E-Invoice Portal Updates
- The user’s state code of “96-Other Country” can be used to select POS against items where the HSN codes 9965 and 9968 (Transportation of goods and services by mail or courier) apply.
- E-invoice documents with a date of January 20, 2012, thereafter, will be considered.
- A new error code has been added, 2295, affecting duplicated requests aside from 2150, with a corresponding error: “IRN generated or registered in the GSTN Lookup Portal by supplementary IRP.”
The government intended to implement e-invoicing as a must for businesses with a total annual turnover exceeding Rs. 5 crores from the previous fiscal year, 2017–2018, to 2021–2022, beginning on January 1, 2023. However, according to a CBIC clarification issued on June 26, 2022, the system will not go live on the scheduled date.
Previously, the first phase applied to e-invoice turnover limits of more than Rs. 500 crores began on October 1, 2020. Businesses with a yearly turnover of more than Rs 100 crore are eligible to begin issuing e-invoices on January 1, 2021, as part of phase II.
From April 1, 2021, Phase III will cover businesses with a fiscal turnover above Rs. 50 crore threshold.
As to phase IV, the government reduced the e-invoice limit above Rs. 20 crores a year later. Phase V was recently implemented, beginning on October 1, 2022, for businesses with more than Rs 10 crore in annual turnover.
E-Invoicing is applicable to the following:
- Invoices for taxes
- Debit cards
- Credit notes
- Supply invoice-cumulative bills
The electronic invoicing system handles transactions such as the following:
- Taxable goods and services for (B2B) Business to Business
- Goods or services from business to government (B2G)
- Export sales
- Sales are subject to the RCM (Reverse Charge Mechanism)
The scope of e-invoicing excludes documents, transactions, and businesses:
- Sales that are exempt from the supply of bills
- Job Works
- Challans de livraison
- Insurance companies, banks, and financial institutions
- Cinematographic films that are shown on multiplex screens
- Non-banking financial institutions
- Transportation companies for goods and passengers
- SEZs (Special Economic Zones), and
- Departments of the government
E-Invoice should adhere to GST invoice rules. In addition, it must accommodate the invoice system or policies implemented in the respective industry. Some information is mandatory, but the rest is an option for businesses. Almost all fields are optional, and taxpayers are free to fill in relevant fields.
The required fields on the e-way bill format are now included in the e-invoice, namely the sub-supply type. Take note of the following important details:
- Twelve (12) sections are both mandatory and optional, and six (6) addendums consist of one hundred thirty-eight (138) fields.
- Of the twelve (12) sections, five (5) are mandatory and seven (7) are optional. Two (2) addendums are mandatory.
- Basic details, supplier information, recipient information, invoice item details, and document total are the five (5) mandatory fields, while the details of the items and the document total are the mandatory addendums.
Digital invoicing is one of the most effective steps businesses can take to modernise their invoicing cycles. It is an important aspect for businesses to understand and comply with. Around the world, governments, particularly in India, have introduced regulations to implement infrastructure related to electronic invoicing.
By following the rules and guidelines, businesses can ensure smooth and efficient invoice generation, reduce manual errors, and promote transaction transparency. Additionally, it is a crucial aspect of modern-day business operations, and it is essential to keep yourself updated with the latest information.
FAQs on E-Invoice Limit
What is the e-Invoice System?
E-invoice is a Tax Invoice that is issued by every registered taxpayer and contains some additional information in the form of a QR code. ‘e-invoice’ in ‘e-invoicing’ is not a generation of invoice by the government portal. It just receives and validates a JSON file of the invoice generated by the supplier, generates an IRN, adds a QR Code, and returns the signed JSON to the supplier.
Who is required to issue an e-invoice?
A registered taxable entity or a person whose aggregate fiscal turnover in any of the fiscal years preceding 2017 and 2018 was more than Rs. 20 crore.
What if you fail to issue an e-invoice?
An invoice issued in any manner other than in terms of Rule 48(4) shall not be treated as a valid invoice. The recipient is not qualified to claim the Input Tax Credit (ITC). A corresponding penalty will be charged to those who fail to issue the same.
What about the cancellation of the e-invoice?
Cancellation must be made within twenty-four (24) hours to IRO through the process “Cancel API.” If successful, GSTR-1 will be updated. However, the connected e-waybill is tagged as active, and upon verification by the authority on transit, the cancellation will not be permitted by the IRP.
Are amendments allowed in e-invoicing?
Amendments are not allowed by the IRP. On any occasion that an amendment is needed, the same will go through on the e-filing portal, and at the same time, you must file a GSTR-1. Such changes are subject to verification by the proper officer for information.
The electronic invoice limit’s latest notification, applicability, and rules help ensure that electronic invoicing is carried out smoothly and efficiently. By keeping yourself informed and adhering to the rules and regulations, you can avoid penalties or fines and continue growing your business successfully.